1. Chapter 6
UNESCAP
Transport and Tourism Division 1
The Evolving Role of theThe Evolving Role of the
Freight ForwarderFreight Forwarder

2. Chapter 6 2
Module objectives
• On completion of this module you should
be able to:
– Define the functions of a freight forwarder
and an MTO
– Appreciate the duties of the freight forwarder
in both his capacity either as a Principal or
as an Agent.
– Differentiate between the liabilities of a
freight forwarder acting as a Principal and as
an Agent.

3. Chapter 6 3
Evolution of the freight forwarder
• Traditionally the freight forwarder was the link
between the owner of the goods and the
carrier, and provided forwarding or clearing
services (as an Agent).
• With the advent of containerization, the
forwarder undertook activities such as packing
and cargo consolidation on his own account
(as a Principal).

4. Chapter 6 4
Evolution of the freight forwarder
• traditionally freight forwarder role is fragmented.
• the freight forwarder was the link between the
owner of the goods and the carrier, and provided
forwarding or clearing services.
• Act as an Agent
Cargo Owner Agent Carrier

5. Chapter 6 5
Evolution of the freight forwarder
• With the advent of containerization, the forwarder
undertook the above activities on his own account (as
a Principal).
Cargo Owner Principal
arrange carriage in his own name
arrange total logistics
Packing, cargo consolidation
• Act as a Principal

6. Chapter 6 6
Functions of a modern day freight
forwarder
• Cargo Consolidation
• Transhipment
• Packing, Warehousing &
Distribution
• Arranging cargo insurance
• Documentation and Customs
clearance
• Payment of freight and local taxes
• Transportation arrangements

7. Chapter 6 7
What would cargo owner expect
the advice from freight forwarder?
• The most suitable mode / combination of transport modes be it
road, rail, sea, air;
• Compliance with any maritime, aviation or other statutory
requirements e.g. in relation to safety and dangerous goods.
• Customs procedures;
• Rates and reliability of service;
• Cargo insurance and liability limitations;
• Practical and technical aspects of the job; and
• Any particular obligations mandatory at the load or discharge port.

8. Chapter 6 8
Freight forwarder: An agent or
principal?
• The distinction between a freight
forwarders role as a principal and as an
agent is important because it
determines the responsibility of the
freight forwarder.

9. Chapter 6 9
The freight forwarder as an agent
• The rule of thumb, although not
conclusive, is that the freight forwarder is
the agent for his paymaster. In other
words, the freight forwarder is often the
agent of the party that pays his charges
(invoices).

10. Chapter 6 10
The forwarder’s duties as a
forwarding agent
• skill and care
• to act with reasonable dispatch
• to follow principal’s instructions
• to preserve the principal’s interests
• to select proper carrier and other service
providers
• to advise on insurance

11. Chapter 6 11
Liability as an agent
• Liability for
– breach of duty
– damage to goods
– negligent advice and/or
misrepresentation
– Personal liability of officers and/or
employees

12. Chapter 6 12
The freight forwarder as Principal
• A freight forwarder will normally be held to be a
principal if he issues:
– a multi-modal transport bill of lading eg. the FIATA Bill of
Lading and the Combiconbill (Combined Transport bill of
lading published by BIMCO in 1995); or
– a house bill of lading as an NVOCC
– performs the carriage himself by his own means of transport
– Issues his/her own transport document
• The above forms of bills of lading impose a clear
obligation on the issuing freight forwarder as a principal
Carrier and where the transport document holds the
freight forwarder as a principal carrier, it will be unlikely
for the freight forwarder to only have the liability of an
agent.

13. Chapter 6 13
The following factors should also
be considered
• The method of charging the customer
• The extent to which the freight forwarder
holds himself as a carrier
• The bill of lading
• Relations between the freight forwarder
and his customers

14. Chapter 6 14
Liability as an principal
• The Freight Forwarder is subject to
liability as principal when he/she:
– performs the carriage himself by his own
means of transport
– Issues his/her own transport document
– Makes an express or implied undertaking
to assume Carrier liability (contracting
Carrier).

15. Chapter 6 15
Conclusion
• Understanding the liability of the freight
forwarder helps avoid disputes with the
customer and/or carrier and creates a
better working relationship.
• Working relationships can easily be
broken through misunderstanding and
time consuming to repair.
Professionalism, once lost, is harder to regain than maintain.